Opening statement by Baroness Chalker of Wallasey Chairman of session on building anti-counterfeit capacity and capabilities Dubai conference 3-5

February 2008 (speech approx 10 minutes) Draft 2 Addressees Todays panel is concerned with one of the most important and pressing subjects facing the successful economic development in our world. Fighting counterfeiting is critical, whether we live in developed or developing countries. affected. But the issue also gets clouded by mixed emotions. In our personal lives we are clear about what is right or wrong. But, when the opportunity exists to get that bargain, we sometimes become less absolute. In short, we drop our standards. Yet how we deal with counterfeiting will indicate how serious governments and business really are about bringing global trading activities within the rule of law. Counterfeiting is stealing. It is corruption. In terms of countries economies and individuals lives, it is unpleasant. In the case of medicines, food and skin products, even washing powder and soap, it is downright dangerous. Aside from the personal suffering there is the economic reality of the extra burden counterfeiting places on health services in developing countries which are under staffed, under resourced and overwhelmed. Businesspeople, decision makers and individual purchasers are ALL

2 Counterfeiting is also NOT some cottage industry run by lovable rogues. It is the visible trade outcome of criminal organisations, often run on an international scale. The perpetrators have one interest in life, to make as much money as possible through illegal production and trading. They have no interest in the effect of their trade on others, on the damage to consumers or to any companys reputation. There must be no equivocation when it comes to illicit trade. To argue that there is some middle ground is to allow criminals to win. The scale of the problem is still not fully known. An OECD estimate in 2007 indicated that counterfeit products were worth over US$ 200 billion back in 2005. But that is less than half of the total being sold across the world, for that value excluded those domestically produced fakes and the digital products traded on the internet. The World Intellectual Property Organisation (WIPO) said that the OECD estimates the cost to companies of counterfeiting to be over US$ 630 billion a year. Then add on the cost to Governments in lost revenues, & the total is at least double this. The effect of corruption also undermines investment and growth. A mid 90s study estimated a 1% increase in corruption decreases investment flows by 5% and growth by 0.5% of GDP. It has NOT improved in the last 10 years, but worsened, and the cost of counterfeiting comes on top of this The very nature of this trade makes detection extremely difficult for the law enforcement agencies. The problem is worsened because there is inadequate capacity in most of the regulatory bodies to fight the illicit producers and traders.

3 The laws in many countries are at best out of date, and in some countries obsolete. Legal systems are unable to cope with detailed investigations required to mount a prosecution. The penalties for those caught are totally insufficient to be real deterrents to the culprits. To add to the complexity of the task for law enforcers, there are now legions of quite new product brokers who deal in illicit goods, allowing manufacturers of the fakes to remain at arms length from the investigators and to cover their tracks. Then there is the serious complication of the misuse of Economic Free Zones. In EFZs, enforcement questions must and can be asked, but some governments still shy away from clarifying which enforcement agencies have jurisdiction. Nevertheless, there are better things happening. From my experience across Africa I find that new laws are being gazetted or are in the pipeline, that initiatives such as the Investment Climate Facility fund is working with the East African Community to fight counterfeits, and the World Bank is also funding similar activities such as the Fair Competition Committee in Tanzania. The East Africa Community are moving ahead, for example by instituting an intergovernmental forum to tackle counterfeiting and piracy in member states. The public and private sectors are working to liaise across the five EAC countries to develop a strategy of combating counterfeiting. In some countries Revenue Protection Departments are becoming very effective in curbing copyright infringement and smuggling. In others Law Reform Commissions are strengthening intellectual property rights protection. Consumer associations are becoming active in some parts of Africa. The role played by the media, particularly the print press, in highlighting the dangers and causes of counterfeiting is commendable, but must be increased.

So, the initiatives are positive but, for many governments, there continue to be resource issues in setting up trading standards organizations backed by up to date law and testing laboratories and specialists departments a real opportunity for productive use of donor funds. Fighting counterfeiting is a global war in which all must participate. The private sector too must play their part. Brand owners are often quick to criticise the actions, or inaction, of local enforcement agencies, but some are doing little to assist. Are they getting out into the field to understand the problems, limitations and resources implications ? Are they engaging with those in national standards bureaux to determine the best route to fight counterfeiting. The war against counterfeiting will not be won sitting in offices in Europe or North America or even conference halls such as this. It will be won or lost on the ground. If the private sector wants help, as it says, then it must be prepared to help, collectively. It can be done. I have seen the work of the Kenyan Association of Manufacturers which meets monthly to take stock of measures and policies for anti-counterfeiting and anti-piracy in Kenya. When companies get together and have strong committed leaders on the ground, things can really happen. In summary therefore: 1 We need commitment from all stakeholders, particularly the IP Rights holders, to rally behind the call to combine efforts in combating counterfeits. 2 3 We need strong leadership to galvanize support from all We need much better information sharing by companies on best practices in combating counterfeits. And we need support from international organisations to ensure adequate training and equipping

5 (capacity building) of national and regional agencies, which includes revenue authorities and standards agencies 4 We need an intensification of country surveillance to plug the channels that the counterfeiters and pirates use to facilitate their illegal trade. Consumer associations and civil society (including the media) are key players in this fight -hence the need for training and support to spread the message and raise awareness. Ladies and Gentlemen, if we are prepared to declare zero tolerance on corruption, as many developing country leaders have done, then for the sake of those leaders, businesses and people, we must do the same with counterfeiting.